Non-Prosecution Agreements: Reserved for VIPs?

Should individuals who cooperate with the government in high-profile cases get better deals than individuals who cooperate in cases that do not make the headlines? The rules laid out in the Department of Justice’s U.S. Attorney’s Manual suggest that the answer—at least in the government’s view—is “yes.”

By way of background, in a typical cooperation plea agreement, a cooperator agrees to plead guilty to a felony charge and to testify against others in exchange for a promise from prosecutors to file what is known as a 5K1.1 letter—a letter that seeks a lower sentence based on the substantial assistance the cooperator provided to the government. This arrangement provides a benefit to the cooperator because courts often impose lower sentences when prosecutors send a 5K1.1 letter. But the arrangement also has significant drawbacks, as it requires that the cooperator suffer the collateral consequences that accompany any felony plea, as well as that the cooperator bear the risk that a court will still impose a significant prison term.

This kind of cooperation plea bargain, however, is not the only tool available to prosecutors to obtain cooperation. Among other options, prosecutors can enter what are called “non-prosecution agreements.” In a typical non-prosecution agreement, a cooperator agrees to testify against others in exchange for a promise from prosecutors not to prosecute the cooperator for specific conduct. Because this arrangement does not involve a guilty plea, it allows the cooperator to avoid the consequences that accompany a felony conviction, including potential jail time. For this reason, a non-prosecution agreement offers what law professor Peter J. Henning called a “kinder and gentler disposition” than the standard cooperation plea agreement.

In determining whether to offer a cooperation plea agreement or a non-prosecution agreement, federal prosecutors are guided by the U.S. Attorney’s Manual, which provides a list of three factors for consideration. Two of these factors are unsurprising: “the value of a person’s cooperation” and the person’s “relative culpability in connection with the offense or offenses being investigated or prosecuted and his/her history with respect to criminal activity.”

The third factor, however, provides that “a significant threshold consideration” is “[t]he relative importance or unimportance of the contemplated case.” The Manual explains that “[s]ince the primary function of a Federal prosecutor is to enforce the criminal law,” prosecutors “should not routinely or indiscriminately enter into non-prosecution agreements, which are, in essence, agreements not to enforce the law under particular conditions.” Rather, the Manual goes on, prosecutors “should reserve the use of such agreements for cases in which the cooperation sought concerns the commission of a serious offense or in which successful prosecution is otherwise important in achieving effective enforcement of the criminal laws.”

Even though the Manual makes the “relative importance” of a case a “significant threshold consideration,” the Manual’s guidance as to the meaning of “important” in this context is lacking. In the paragraph quoted above, the Manual makes the obvious point that cases involving “serious offense[s]” qualify as important, and the circular point that cases are “important” if a “successful prosecution is otherwise important in achieving effective enforcement of the criminal laws.” This bare language does little to assist prosecutors in the exercise of their discretion.

The question of what cases qualify as “important” enough to justify non-prosecution agreements is further complicated by the fact that, at some level, every federal criminal case qualifies as important. Certainly, every case is important not only to the defendants being prosecuted and to the victims who are harmed, but also to the government, which is responsible for enforcing the law. Indeed, in an effort to ensure fair consideration, district courts frequently instruct juries, often at the government’s request, and even in routine matters, that “this case is important to the defendant,” and is also “important to the government, for the enforcement of criminal laws is a matter of prime concern to the community.” The vague standards spelled out in the U.S. Attorney’s Manual, coupled with the general notion that all criminal cases are important, leave substantial uncertainly as to what cases meet the threshold level of “relative importance.”

Recent experience suggests that, at a minimum, high-profile white-collar cases qualify as “important.” For example, in the prosecution of Mathew Martoma for insider trading, the Department of Justice entered into a non-prosecution agreement with Dr. Sidney Gilman, who had provided Martoma with inside information.* In the prosecution of former New York State Assembly speaker Sheldon Silver, the government entered into a non-prosecution agreement with Dr. Robert N. Taub, who received, according to prosecutors, taxpayer money and other benefits in exchange for sending patients with asbestos-related claims to a law firm that shared fees with Mr. Silver. The Department of Justice also entered into a non-prosecution agreement with Bruno Iksil, the so-called “London Whale,” in an apparent effort to make cases against his superiors in connection with the more than $6 billion in trading losses his bets caused JPMorgan Chase.

These cases drew some perplexed reactions from commentators. One writer noted that the London Whale’s “non-prosecution deal” was “a rare move that left some in the defense bar puzzled.” Another observer called Iksil’s non-prosecution deal “kid of nuts!” And during the Martoma prosecution, Professor Henning asked, “why did the Justice Department opt for a nonprosecution agreement with Dr. Gilman rather than a plea bargain?” But in light of the U.S. Attorney’s Manual’s instruction that prosecutors should consider the “relative importance” of the case as a threshold matter, these deals make sense: Whatever the word “important” means, these cases qualify.

The question remains, though, whether it is appropriate for the “kinder and gentler” treatment of a non-prosecution agreement to be reserved for only those individuals whose cooperation helps make important newsworthy cases. One defense of the practice might be that high-profile cases provide more general deterrence to criminal conduct than lower-profile matters, and this justifies entering into non-prosecution agreements whenever necessary to make these cases. That’s true to a point, but it is also true that cases do not need to be in the papers to provide a general deterrent to crime. Further, high-profile prosecutions underscore not only the conduct being prosecuted, but also the conduct of the witnesses who testify in exchange for non-prosecution agreements, only highlighting the good deals they received.

The U.S. Attorney’s Manual suggests additional reasons why the government might insist on a cooperation plea agreement, instead of a non-prosecution agreement, but it is not clear that they hold up. First, the Manual says that a witness who “already has been convicted” of a crime (that is, a cooperator who has pled guilty pursuant to a cooperation agreement) will be “far more credible” in front of a jury “than if it appears to the trier of fact that he/she is getting off ‘scot free’” (as arguably happens with a non-prosecution agreement). The government’s recent successes in the courtroom in the Martoma and Silver cases, however, cast some doubt on this assertion, as those trials show that the government is able to use witnesses with non-prosecution agreements effectively at trial.

The Manual also asserts that it is “it is certainly desirable as a matter of policy that an offender be required to incur at least some liability for his/her criminal conduct.” That may be true, but it is not clear why this policy should fall by the wayside in newsworthy cases alone. Further, there are countervailing considerations that weigh in favor of non-prosecution agreements in even routine cases. As United States District Judge Emmet G. Sullivan recently observed (in the course of an opinion addressing deferred prosecution agreements), offering defendants “the chance to demonstrate their true character and avoid the catastrophic consequences of felony convictions” could help reduce “over-incarceration and bolster rehabilitation.” These worthwhile goals would be considerably advanced by the use of non-prosecution agreements for qualifying cooperators regardless of the relative importance of the cases those cooperators help make.

On the whole, even if it makes sense for prosecutors to give some amount of consideration to the “relative importance” of a case in assessing whether a non-prosecution agreement is appropriate, it is not at all clear why the Department of Justice makes this “a significant threshold consideration.” As written, this instruction does too much to encourage the use of non-prosecution agreements in high-profile matters alone, and too little to advance the use of these agreements across the spectrum of cases in which they would be warranted. The fair administration of justice would be better served if the Department of Justice cast this instruction aside and made non-prosecution agreements available to deserving cooperators regardless of a case’s “relative importance.” Until that happens, though, in appropriate circumstances, counsel should consider ways to impress upon the Department of Justice the “relative importance” of the cases their clients can help with, even if those matters may not show up on the front page.

* Brian A. Jacobs previously served as Deputy Chief of Appeals at the U.S. Attorney’s Office for the Southern District of New York. In that capacity, he supervised the government’s briefing and oral argument in opposition to Martoma’s successful request, following his conviction, that the Second Circuit grant him bail pending appeal.